Good morning, ladies and gentlemen. Welcome to TIM Participações 2019 third quarter results conference call. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the company's presentation. There will be a replay for this call on the company's website. After TIM Participações remarks are completed, there will be a question and answer session for participants. At that time, further instructions will be given. We highlight that statements that may be made regarding the prospects, projections, and goals of TIM Participações constitutes the beliefs and assumptions of the company's board of executive officers. Future considerations are not performance warranties. They involve risks, uncertainties, and assumptions as they refer to events that may or may not occur.
Investors should understand that internal and external factors to TIM Participações may affect their performance and lead to different results than those planned. Should any participant need assistance during this call, please press star zero to reach the operator. Now, I'll turn the conference over to the CEO, Mr. Pietro Labriola, so he can present the main messages for the third quarter of 2019. Please, Mr. Pietro, you may proceed.
Good morning, everyone, and thanks for attending this conference call. During the last months, we had to make several adjustments. First of all, we had to adjust our business practices in order to adapt to new realities while maintaining our focus on the long term. We had to make some tough decisions and some tough choices during this process. I will walk you through the main highlights of the third quarter, and then the team will help to answer your questions. In the third quarter, we were able to post solid results, maintaining our consistency across the board. Service revenue continued to show an acceleration in growth, reaching 3% year-over-year versus 2.4% of the last quarter.
We still have a lot of work to do in these months. This encouraging trend, together with the positive seasonality of the fourth quarter, keep us confident on reaching our annual guidance for service revenue. We continue to perform very well on the cost side, down 0.6% versus the third quarter of last year, which, combined with better revenues, led to an acceleration in EBITDA. Our growth reached 6.8% compared to last year, allowing EBITDA margin to expand to 39.6%, another record for our company. EBITDA minus CapEx reached close to BRL 800 million during the quarter, which means a growth of 7% year-over-year. The reduction of a similar amount on the net financial position in the last 12 months is once again showing our strong cash generation, even after the interest on capital payments.
As you see, we are preparing the company to be ready for a more dynamic industry that we'll have in the near future. As we stated before, TIM wants to be a protagonist in the evolution of the Brazilian telecom market. The acceleration in mobile revenues we are showing today from 1.9 in the second quarter to 2.8 in the third quarter is being supported by our new approach to the market. Revenues for prepaid segment continue to improve while postpaid is performing well. It still needs some fine-tuning to reaccelerate, and we will do that. We will complete. Our mobile ARPU increased by roughly 6% year-over-year, reaching close to BRL 24, not only by the better mix on customer base, but also by improvement in both segments. Compared to the third quarter of last year, postpaid ARPU grew 1% and prepaid ARPU was up 4%.
Prepaid improvements comes from the simplification that TIM implemented in the beginning of the year. Today, TIM Pré TOP represents 60% of our prepaid sales and is positively contributing to revenues, customer experience, and branding. On the revenue side, this offering, along with less competitive pressure at some signs of market recovery, are pushing recharger levels back to positive after years of sequential decline. Prepaid data user are up 2.70%, confirming data penetration as a significant opportunity since more than 40% of our clients still do not use data. TIM Pré TOP, as I said, is also positively contributing to a better customer experience and brand recognition. The simplification of adding service packages directly to the recharger brought by this offering reduced demand in our call center, which contribute to our customer satisfaction and generate additional efficiencies.
All this led us back to be the first in top of mind of prepaid clients. In the postpaid segment, it's important to realize that despite the negative effects of recent months, we are still capable of having a compelling offer to capture customers as our growth statistics show. The trend in the last 12 months is positive, growing more than 9% year-over-year. We are also solving issues related to the involuntary churn of delinquent customers. We are running above the average of a year ago, which some peaks related to system issue and the former commercial approach. Finally, we are seeing the indicators improving. TIM Black Família, which was launched last quarter, is getting more traction and today represents half of our pure postpaid acquisition.
The entertainment hub concept, in addition to contributing to acquisition, is promoting brand recognition and innovation. This, together with a more consistent communication and advertising, brought us back to the second place in top of mind of postpaid. This will be our future platform to deliver content, software, and other services. Device business is another area we are working on. We are using devices as an important tool in order to offer upgrade in customer plans and second customer engagement. This tactical move is still in the early stages, but we expect that the device business will continue to drive data adoption and service revenue growth without having to change our low subsidy policy. In sum, we are seeing some improvements in the mobile segment. Competition is not so harsh as it was in the first half.
Macro environment is showing small evolution, our operation is on track and focused on what matters. With this, we expect another period of solid progress in our result for the fourth quarter. As I said before, consistency is our priority. We are doing things step by step to ensure that we deliver on our promises with quality. In the fixed segment, TIM Live has been a highlight of our results for quite a while. Once again, posting a very solid pace while catching up with our FTTH rollout. Revenue growth of more than 30% year-over-year was once again driven by a combination of high single-digit ARPU expansion and a solid double-digit customer base increase. TIM Live customer base reached close to 540,000 clients, almost 50% in FTTH. In TIM Live region, we were the only large player to post positive ARPU in the third quarter.
During the third quarter, we entered three new cities, being one of them Recife, one of the largest capital of the Northeast. TIM reached 1.9 million households covered with fiber technology, and until the end of the year, our FTTH network recovery plan will be completed, which will put us in a condition to add 16 more cities until 2020. Investment in TIM Live represented almost 10% of the overall CapEx in the nine months of 2019. FTTH network is just a part of our infrastructure strategy. Our smart CapEx approach is being applied to all fronts to ensure a level customer experience that will open up monetization opportunities on mobile platform. Some important initiatives I'd like to share with you. Still on the fiber side, FTTH coverage, as I mentioned before, is accelerating. We're covering two and a half times more households than a year ago.
We are also expanding our transport network. In the past 12 months, we have increased backbone and backhaul meters of fiber by more than 10%. For the mobile network, our 4G coverage continued to expand, driven by 700 MHz rollout, with more than 40% growth in cities covered with these frequencies. 4.5G coverage is also accelerating, 70% growth in the city with carrier aggregation and the leadership in the state of the northeast and south of the country, where we are the leader. We continue with our spectrum refarming project at the same time as we reach 3,300 cities with VoLTE. We are also implementing new initiatives. Our mesh and Internet of IoT network reach 3,000 cities and is the largest in the country. We expect this to be a key differentiator in the business. We are pushing forward with the implementation of Massive MIMO in 4G.
As we commented in recent months, this technique can boost capacity by two to three times. The MoU with DISH for network sharing was renewed. Discussions are going well, and we expect to have news on the outcome of these negotiations in the coming months. As we develop our infrastructure to improve customer experience and satisfaction, we continue to prepare for the future. Our journey to 5G started more than a year ago, and we keep moving forward to be a key player for this evolution in Brazil. Our network preparation is moving fast with small data center for content and network virtualization being deployed. 5G ready equipment being sold to ease migration. At the same time, we continue with our real network test on three different locations with three different vendors. We are also preparing the test to engage customers and present to them the benefit of the technology.
More than 10 stores will be supplied with 5G equipment and devices so clients can experience different application of this new technology. Among these different applications, such as IoT, smart cities, and others, it is worth mentioning that we believe that one of the main use case to benefit the Brazilian population will be the ultra-fast broadband in the home using a fixed wireless access solution. This should represent a very interesting opportunity for the market and especially for TIM in the coming years.You well know, we are as focused on accelerating revenue growth as we are in improving quality and being an efficient company. That is why we see development in our IT platform with the same importance as our network. The digital transformation we are implementing will only be achieved by changing our processes and introducing new ways to better serve our customers.
For example, we implemented the Naked SIM platform that allows TIM to sell any type of plan on any type of sales channel, doing all the network provision in real time. In addition, we are working on a Next Best Action approach to better customize offers to cluster all our customer base. The next two key deliverables will be and artificial intelligence customer care. Both projects are expected to significantly improve the quality of our caring service and to be an important driver of further efficiencies. As you have been following in recent quarters, we are measuring the evolution of our digital transformation program on 4 fronts: caring, billing and payment, acquisition of clients, and prepare recharges. In all of them, we are delivering changes that empower customers that are closer to our 3 F goals: self-caring, self-healing, and self-provisioning.
With the contribution of this and other traditional initiatives, we are capturing efficiencies at a strong pace. From our efficiency plan of BRL 1.2 billion between 2019 and 2021, we reached BRL 461 million by the third quarter 2019. This contributed to normalized OPEX decrease of 0.6% in the quarter and 0.2% in the nine months of the year, well below the inflation. These solid results on cost could be even better if it wasn't for the bad debt. Normalized OPEX, with the exception of bad debt, would have decreased 2.5% year-on-year. We like to look on the bright side of things. Once we have completed our action plan, these initiatives will become an excellent opportunity to further improve our EBITDA and margin. A quick update on the initiatives we are implementing. On the credit front, we have partially implemented the new credit model.
In order for this new model to work, we are using new internal and external databases, which provide a better ability to understand customer behavior. Regarding our billing systems, we're implementing new models and adding new features to improve system stability and performance. As we commented earlier in the year, we had some issue during this upgrade that negatively impacted involuntary bad debt. These problems are behind us, but the evolution of our billing system is an ongoing effort. Each section, we are already seeing some results. The new approach and channels we are using are increasing our recovery rates, but we need to improve further to meet our expectation. All in all, we are confident of showing a better trend for delinquency in the fourth quarter 2019 and in 2020.
The acceleration of revenue with strong cost control drove EBITDA growth to almost 7%, confirming the improvement trend presented in the second quarter 2019, and with margin expansion of 170 basis points to another record of 59.6%. The long-term trend of our margin clearly show TIM's commitment to be a very efficient operator. Also, on the bottom line, the result was strong. Since in the third quarter, we posted normalized net income of BRL 619 million, an increase of more than 60% year-over-year. In the nine months of 2019, the growth was 54%. EBITDA minus CapEx increased 7% year-over-year to reach 18% of total revenues, leading normalized free operating cash flow to BRL 1.1 billion in the quarter.
Our share of the remuneration following the two interest on equity announcement during the quarter totaled BRL 753 million, which puts us on track to meet our guidance of approximately BRL 1 billion for the year. In conclusion, we delivered a solid quarter, confirming we are regaining momentum and are still in a position to deliver on our 2019 promises. We were able to reload our operation with the focus on the basics, value rather than volume, quality, innovation, branding, and last but not least, customer satisfaction. For us, 2020 already began. Our updated plan that should come out in the new year will provide more details on the initiative we have already started to develop, such as mobile advertising business, which has already closed, financial services taking advantage of TIM's asset, 5G preparation, and development of more IoT verticals. Thank you. We will now open the floor for questions.
Please, operator.
Thank you, Mr. Pietro. We will begin the question and answer session. First, we will take questions from analysts, followed by the journalists, both in English. We ask each participant to restrict himself to two questions at a time. To ask a question, please press star one, and to remove the question from the list, press star two. Please hold on while we gather the questions. Excuse me. Our first question comes from Fred Mendes, Bradesco.
Good morning, everyone, and thanks for the call. I have two questions here. The first one is related to the mobile service revenue. Just trying to get a better understanding of this line orders. I know it has been increasing and showing very solid on this quarter, now 55% year-over-year. Just trying to get the understanding potential for this line to continue to grow, and also a little bit of the rationale for this strong growth in the last quarter. This will be my first one. My second one related to the PDD. Continues to grow. I think Pietro already mentioned that in his previous speech. Our understanding here is that on the second half, we should start to see some improvement. Of course, the third Q, the number continue to grow.
Just trying to understand what these new initiatives you mentioned you are implementing now are different from the previous ones, and also what would be an improvement here? An improvement would be a slower growth or relevant with the reduction. I know you don't give a guidance for this line, but if you just guide us here, this would be great. Thank you.
Thank you, Fred. Related to mobile revenues, as we stated also in the last call for the second quarter, we are accelerating both on mobile service revenue, both on other revenues, which claim that other revenues is a part of our business. In a market where the backbone construction is part of our strategy and is one of the key elements, the possibility to get in a faster way and in a more efficient way through the result is part of our business. We think that this line will continue to have this kind of pace because it's part of our business. You know better than me that in the market, there is a new demand for backbone transport construction. We think that we'll continue with this approach that I repeat, is faster and is more efficient than build our own network.
Related with the PDD, Adrian can add me more. For sure, it's clear that we are slightly late with what we told in the beginning of the year. We think that if you look at the absolute value from the second quarter to the third quarter, we have a deceleration in terms of growth rate, and the difference is very small. As we stated, we foresee a fourth quarter that will see a stabilization quarter-on-quarter or perhaps a slight reduction compared to the result of the third quarter. The initiative that we put in place that we described are already showing in the number of October good results. I leave the stage to Adrian to give some more colors on these activities.
Hi, Fred. Also regarding the first question about this other line in terms of revenues and the growth in terms of swap. It's also related to the evolution of our topics, because if you see also this quarter, we posted a negative number in terms of evolution, of course, on the lease line. From our view, it's much more efficient to make swaps rather to lease line. At the end, if you're doing the swap, your EBITDA will be more solid. Having the lease line will be negative. This is something that we've been working a lot. You'll see, and you've seen in the presentation, the evolution of the high-speed connection over sites that we are having. It's always related to the business. You should expect similar trends, probably not in terms of growth, but yet in terms of in nominal terms.
Going to the second question related to the delinquency. Clearly, it's something that for us is still a challenge. We stated this already at the beginning of this year. It's both coming from some external issues, but also some internal issues. We've been working a lot these quarters. The thing is, the PDD reflects what happened probably and mainly six or seven months ago, because with the new standards or via IFRS 9, the higher impact on the PDD comes from the issues of six months ago. I won't say that we solved all the issues. We evolved a lot. We are already seeing some signs of improvement. Clearly, we're going to have some year-over-year growth in the fourth quarter, but what we are expecting is that the third quarter, this third quarter that we already closed, should be the peak in absolute terms.
You will see this in the next four quarters. This is also an opportunity in going forward in 2020 for additional efficiency, as Pietro mentioned. Again, it has a lot of focus on our side. We have a big portion of our company helping on this side, and we will continue to work. As I mentioned, we think that this third quarter should be the peak in absolute terms.
Perfect. Very clear. Thank you, Pietro. Thank you, Adrian.
Excuse me. Our next question comes from Daniel Federle, Credit Suisse.
Hi, good morning, everyone. My first question is regarding prices in the mobile segment. We have been seeing certain competitors increasing prices significantly over the past two quarters. My question is if that's an opportunity for TIM as well to implement a more significant price increase in the coming quarters. My second question, we see that the macro conditions have been challenging in the past two years. My question is if the macro conditions indeed improve in the coming quarters, if that change in some way the strategy of the company, maybe investing more to capture growth or focus more on the prepaid instead of the postpaid? If something changes in the strategy overall? Thank you.
Thank you, Daniel. Related to the price up, have to remember that we were the first player, starting from 2016, that every year price up our own customer base. We think and we believe also in an approach that is a more for more approach, also to reduce the reaction of the customer and the churn when this kind of event can happen. It will be part of our strategy, and we will continue on that. With some different details related to our characteristics, but I can confirm you that this is an opportunity. I remember that we priced up our customer base this year in February, and we try to respect our goal to do that once per year. Related to the macro condition, it is important, if I can do some advertising for our company.
In our plan, we were forecasting a growth of 2.5% of GDP, we are aligned with the guidance, with the macro that reach only a growth of 0.8%. For sure, sign of improvement could help us, for sure could help mainly part of our customer base, because we are used to talk about prepaid as a part of the segment that is impacted by the macro. We have to remember that today, a good part of prepaid was migrated to control. An improvement of the macro can help, not only TIM, but for the market on prepaid and on control. It's important to further detail that going ahead, prepaid is an important segment on which we have to further improve our capacity in terms of growth market, because we see opportunity to be back to grow also in prepaid.
It's not the case that the focus that we put in the last month allow us for the first time after 36 months to have rechargers that are back to grow compared to the past.
Perfect. Thank you very much.
Excuse me. Our next question comes from Susana Salaru, Itaú.
Hi. Good morning. Thank you for taking our questions. If you could elaborate a bit more about your two new initiatives on the financial services and mobile advertising, that will be our first question. Just our second question is related to the revenue sharing with Oi. When do you guys expect to make an impact in the P&L in terms of reducing the OpEx of TIM? That's it, guys. Thank you.
Hi, Susana. Thank you for the question. Related to these new initiatives, for sure, in the presentation of the new planning, we'll go much more in detail. Just to give you a flavor about what we're talking about, when we discuss about, let me say, advertising or digital advertising, we connect there in two ways. One is as a publisher. We have a lot of assets that we can exploit to sell advertising. Just to give you an idea, every time the TE of our prepaid customer ends the recharge, they are directed to a portal to convince them to do a recharge. We can put on this portal some video that can be a sponsored one or can be an advertisement. We are starting to sell this kind of advertising.
The second element we are working on and putting a lot of attention on the new rules on privacy that will arrive in August. We have the capacity to do segmentation of our customer base that is very important. We can start to act in the next year also as a DMP, so we can sell the profiling of our customer base to improve mobile advertising from people that want to buy advertisement. I don't have to say that, as I repeat a lot of times, when there is someone that is doing something better than us, we can copy. I don't have to mention to you the initiative of Vivo Ads that they had in the past that show good results in terms of revenue, we think that we can apply in the same way.
Related to financial services, this is something we are working on, and this is another way to monetize our customer base. On this area, we are still working, so I cannot go too much in detail, but for sure, in the presentation of the new plan, we will give much more detail. First, I can assure you that will be very interesting initiatives.
Perfect. Thank you.
About revenue sharing.
Your second question was.
Revenue sharing
related to the MoU with Vivo, Susana, or?
Yeah. When do you guys expect it to actually be reflected in the P&L of TIM, the revenue sharing, in terms of OPEX savings?
Regarding OPEX, clearly, it's something that we are still working on. We're working a lot on both sides. You know that the MoU was related to two different initiatives. That is the Single RAN, the 2G, and the Single RAN in cities below 30,000 inhabitants. The thing is, we still don't have the numbers, clearly. There are significant impacts that we are analyzing. You probably will see these cost reductions starting in 2021, 2022. Why? If we manage to close, as we mentioned, in the next couple of months, this contract, probably 2020 will be the year that we will be working in order to set industrially the agreement. You should expect this impact 2021 and onwards.
Okay, clear. Thank you.
Excuse me. Our next question comes from Vinicius Ribeiro, UBS.
Yeah, guys, good morning. Thanks for taking my question. The first one, because you said during your presentation that the annual guidance for your service revenue is somewhat underway. Just like to understand where should this acceleration in mobile service should come from, and what do you guys expect for the next year starting the first Q? Our second question is just like to get a color from you guys on the AMX Next review, which you guys have requested alongside with Ricardo to be part on your own part. Just to understand what you guys expect from that, if the antitrust gives what you guys are asking, what's the potential impact for you? Thanks.
Oi. I was speaking in Portuguese. Hi. Thank you again. First of all, related to where the acceleration that could be in the fourth quarter to allow us to reach the guidance. As we told every time, the fourth quarter is always for a few mobile operators as TIM, is always an important seasonality, mainly from prepaid. This is one of the reasons for which usually in the fourth quarter, as you can see every year, we posted also a better result in terms of EBITDA. Why? Because we have more revenues compared to the previous quarter due to this seasonality. We have also a better EBITDA. We see in this seasonality the opportunity of the acceleration, and looking at the number, the first number of October, we are quite confident that we are able to reach the target.
Again, it's mainly related to the seasonality, because always the second, as we stated also when we announced the result of the second quarter, in Brazil, looking at our number, the second half has a seasonality that is much more important than the first half. Related to the Claro and Nextel. Let's repeat the answer that I gave also to some journalists. I'm a CEO of a company quoted to the stock exchange. If there is any movement that can change the way of the competition, we have also to look and evaluate if it can be something that change the competition or not. There's nothing specific. We enter in the CADE to have a better evaluation about how this deal can change the competition data field.
Okay, thanks. Thanks for the answer.
Excuse me. Our next question comes from Andre Baggio, JP Morgan.
Hi, good morning, everyone. We are seeing once again, Oi collapsing and having problems with their debts and possibly putting assets for sale, and TIM was mentioned as one that would be interested in these assets. Just to clarify, I understand there are the synergies of mobile, of Oi for TIM, but can you talk a little bit about other assets that could be interesting for TIM in your view?
Sure, Andre. I can start with the second, without go too much in details. Again, I will state what I told also this week during an event in São Paulo. For a mobile operator, assets as spectrum, a calling and backbone are always assets important to the quality of our network. We have a level of CapEx in our plan that in an increased way means that we have to continue to build transport backbone, backhauling, and new antennas. If at certain point, some of these assets could be available on sale on the market, it's our duty to evaluate it is something related to our plan that can aggregate value. This is not only related to Oi because there are a lot of discussion related to it. This is the evaluation that we are doing also related to the 5G auction because there are other frequencies.
The evaluation of the possibility to use other players that are building, other essential company utilities that are building network, that can allow us to put further fiber. This is something that we are doing on a daily basis. This is the huge job that [Leo] is working on, and this is the thing that we did in the right way and in a clever way in the past. Last but not least, sometimes you have to look to technology, because often technology is a black box. If you choose at the right time, the right technology, you can gain some competitive advantage for a certain amount of time. This is the case of Massive MIMO, is a technology that is coming from 3G that can be applied on the 4G and that can allow to improve the spectrum efficiency.
I don't know if [Leo ]wants to add more color on that.
You're completely right. It's important to understand that all the time we are analyzing what is the better situation for existing asset, if it is buy or make or lease or swap. It is a continuous work that we have doing with the CFO. Specifically, your first question for Oi, you are right. The mobile is a clear asset, but they have a lot of fiber. The way that they probably will take this available for the market can be different, not specifically by sale, but can be in a different way for capacity, rental, swap, et cetera. We are always analyzing all the opportunities. As Pietro mentioned, at the same time, we are seeing all the opportunity in terms of technology to improve our capacity using the existing assets.
Remember that we did the refarming with 1800 on the new cycle of the 4G. Now we are bringing to Brazil this new technology that is called Massive MIMO. What in the previous testing show us that we can improve our capacity into three, four times using the existing spectrum. It's very good because it showed to us a near future in terms to achieve the currently capacity growth without for high densification of sites. This is our day by day. Okay, Jeff?
Perfect. Thanks a lot.
Excuse me. As a reminder, if you would like to pose a question, please press star one. Excuse me. Our next question comes from Luiz Azevedo, Banco Safra.
Good morning, everybody. I have two questions. First is regarding if you analyze any type of franchise, as for example, Telefónica and Oi is doing to accelerate the deployment of fiber connections. The second question is regarding the 5G. What do you expect to be the auction in terms of timing and in terms of disbursements and CapEx? How do you see it right now? Thank you.
Thank you, Luiz. Related to the first question, we are analyzing different model with an approach that we internally call smart CapEx approach to continue to grow with TIM Live. Among these approach, there isn't something similar to the Vivo one. Related to the second question on 5G, we are very interested in understanding better the rules of this new technology wave. If we don't have a clear understanding about the rules, any kind of discussion makes no sense because it's quite difficult to say the level of capital requested, the kind of revenue that we can have. As we mentioned, as we stated again, we prefer to have something later with clear rules than something tomorrow with unclear rules.
Excuse me. We will move on to the questions received via webcast.
Hi, everyone. This is Vicente Ferreira speaking. Our first question comes from Fernando Paiva from Mobile Time, and he would like some clarification on what is the involuntary churn that we mentioned during the call and in our documents. If we can give further details on the initiatives that are being taken to reduce it, related to new models of credit and improvements in our collection system. The second question, also from Fernando Paiva, is related to additional details of what is the next TIM project related to artificial intelligence in customer caring. Please, Pietro.
Okay. Related to the second question, that is related to artificial intelligence on the customer care. What we are doing is that, let's try to simplify the concept. Today, when you interact with an IVR, that is the answering machine, you have only option. The IVR is going to propose you, if you are calling for issue 1, issue 2, issue 3, issue 4. With the artificial intelligence, jointly with the speech recognition system, we are able to allow to the customer to speak in a natural way with our technology, and we're able to understand which is the issue, and we're able to answer in automatic way also to the issue.
Keep in mind that today, already improving our capacity to understand all these elements, we are able to increase by 5 percentage points the number of calls that we are answering on the call center to an automatic system. As a saving in terms of attendant cost. This is just one of the parts of the way in which we are going to use artificial intelligence, perhaps, the level of details needs to have a specific session to discuss that. We are ready to discuss and show to you all these details. Related to involuntary churn. Again, we mentioned in the presentation the three areas on which we are working at. The fifth one is more to prevent the acquisition of customers that have a higher level of risk in terms of debt payment. How that?
Improving our level of database to recognize the customer that have a higher level of risk. At the same time, in the third point of the presentation that we show is to act in a better way to recover money when a customer doesn't pay. These are two of the three area on which we are working. The last one that was the billing. For sure, it's much important also to have a system that is able to bill the customer in the right date and to deliver to the customer the bill exactly when is the right moment. As we mentioned before, in this area, we had issue at the beginning of the year. These are area on which we have already worked on, and we are improving. This is the reason for which we expect to have an improvement in the last quarter of the year.
The next question coming from our platform is from Ana Paula Lobo, from Convergência Digital. She asks about how TIM can accelerate the migration of the 50 million devices that are still 2G and 3G technology. What is TIM's strategy?
Okay. I think that is we don't have a silver bullet to do everything at once. The activity that with our team we have put in place are several. First of all, as we mentioned, Next Best Action as a platform. Every time that a customer that has a 2G or 3G handset call our call center, or why we do not propose to our customer to migrate to 4G, explaining the advantage. Every time that a customer with a 2 or 3G handset come in our shop, why we do not propose to do that? Compared to the past, our system in the past had some difficulty to allow to all our attendant to have visibility of which was the handset that the customer had in his hands.
Today, with this Next Best Action platform, jointly with an increased level of segmentation, we are able to have a more sniper approach of all these customers.
Just to complement, Pietro, we have to remember that since two years ago, that we are not to sell more 3G, 2G devices in our store. What it means that our focus is to provide the customer with the better technology, 4G, on our own store and our partners. I guess that it is one of the part that help us
To speed up so much our use base in terms of 4G. For sure, again, there are some details that we cannot disclose because if not, we are going to be defining to the competition our marketing plan.
Ladies and gentlemen, without any more questions, I am returning to Mr. Pietro Labriola for his final remarks. Please, Mr. Pietro, you may proceed.
I want to reiterate what I've been saying in the past months. TIM Brazil has a strong fundamental, and we are preparing ourselves to take full advantage of the economic recovery and be a protagonist in the future development in the Brazilian market. This market is not so easy, but keeps having potential, requiring focus and consistency. To close the year strong and achieve all our goals, we will need excellence in execution and economic progress to continue. We are optimistic that both will be present in the fourth quarter. I want to remark the professionalism and dedication of our team who continue to make the difference to deliver those solid results. Thank you once again for participating in our conference call. Have a great day, and I hope we can meet soon.
This concludes the third quarter of 2019 conference call of TIM Participações. Your line can be disconnected from now on. For further information and status of the company, please access our website, ri.tim.com.br. Thank you.